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Multico (a US-based company) forms a wholly-owned subsidiary in Italy (Italco) on January 1, 2009. On tha invests in Italco when the exchange rate was 1.00=1$. At December 31, the balance sheet and the income statement of Italco were as follows: Income Statement () 8,000,000 6,000,000 2,000,000 825,000 Sales Cost of goods sold Gross profit Selling and administrative expenses Depreciation expense: Property Plant & Equipment Depreciation expense: Building Interest expense Income before tax Income tax expense 200,000 20,000 180,000 775,000 275,000 Net income 500,000 Balance Sheet () Cach Accounts receivable Inventory Property, plant & equipment Building 550,000 600,000 800 000 2,000,000 80,000 550,000 600,000 800,000 2,000,000 80,000 Balance Sheet ( Cach Accounts receivable Inventory Property, plant & equipment Building Accumulated depreciation: Property Plant & Equipment Accumulated depreciation: Building Total assets Accounts payable Long-term debt Total liabilities Capital stock Retained earnings (200,000) (20,000) 3,810,000 310,000 2,000,000 2,310,000 1,000,000 500,000 Total liabilities& capital 3,810,000 Relevant exchange rates were as follows: Spere When property, plant & equipment were purchased 0.98 Average 0.95 December 31 9.90 0.91 When ending inventory was purchased When building was purchased 0.97 statements into $ using Method) Multico (a US-based company) forms a wholly-owned subsidiary in Italy (Italco) on January 1, 2009. On tha invests in Italco when the exchange rate was 1.00=1$. At December 31, the balance sheet and the income statement of Italco were as follows: Income Statement () 8,000,000 6,000,000 2,000,000 825,000 Sales Cost of goods sold Gross profit Selling and administrative expenses Depreciation expense: Property Plant & Equipment Depreciation expense: Building Interest expense Income before tax Income tax expense 200,000 20,000 180,000 775,000 275,000 Net income 500,000 Balance Sheet () Cach Accounts receivable Inventory Property, plant & equipment Building 550,000 600,000 800 000 2,000,000 80,000 550,000 600,000 800,000 2,000,000 80,000 Balance Sheet ( Cach Accounts receivable Inventory Property, plant & equipment Building Accumulated depreciation: Property Plant & Equipment Accumulated depreciation: Building Total assets Accounts payable Long-term debt Total liabilities Capital stock Retained earnings (200,000) (20,000) 3,810,000 310,000 2,000,000 2,310,000 1,000,000 500,000 Total liabilities& capital 3,810,000 Relevant exchange rates were as follows: Spere When property, plant & equipment were purchased 0.98 Average 0.95 December 31 9.90 0.91 When ending inventory was purchased When building was purchased 0.97 statements into $ using Method)